Trilemma

grab any two. the third breaks in your hands.

hold free capital, a fixed rate and your own interest rate at once — and watch the market take one back

Every country would like three things at once: money free to cross its border, an exchange rate that stays put, and an interest rate it sets for itself. Any two of those can be held together. All three cannot, and not because a rule forbids it — because the arithmetic does not close. If money can move and the rate is pegged, then the moment your interest rate differs from the world it becomes free money to anyone who moves capital, and the pressure either breaks the peg or forces your rate back into line. So every central bank on earth is standing at one of three corners, having already given something up, and which one it gave up explains most of what it does next.

Concepts: constraints, game-theory.

An interactive you play with one thumb, on Wundr.